CES Beneficiary Rights & Distribution Planning Flashcards
6 cards from real CES practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CES Beneficiary Rights & Distribution Planning flashcards as text
Under the Uniform Trust Code, which right allows a beneficiary to receive information about the trust and its administration from the trustee?
Answer: Right to an accounting
Beneficiaries have the right to an accounting, which requires the trustee to provide information about trust assets, income, disbursements, and administration.
A discretionary trust gives the trustee sole authority over distributions. Which standard best protects a beneficiary challenging an improper distribution denial?
Answer: Abuse of discretion standard
Courts review discretionary distribution denials under the abuse of discretion standard, meaning the trustee must act in good faith and within the bounds of the trust document.
What is a 'spendthrift provision' designed to do in a trust?
Answer: Prevent beneficiaries from transferring their interest to creditors
A spendthrift provision restricts beneficiaries from voluntarily or involuntarily transferring their trust interest, protecting it from their creditors.
Which type of beneficiary holds a present, legally enforceable interest in a trust?
Answer: Current income beneficiary
A current income beneficiary has a present, vested right to receive income distributions from the trust during the trust's existence.
When a trust document is silent on the frequency of distributions, what obligation does a trustee typically have regarding income?
Answer: Distribute income at reasonable intervals, often quarterly or annually
When a trust is silent, trustees generally distribute income at reasonable intervals such as quarterly or annually, consistent with the Uniform Principal and Income Act.
Which planning tool allows a beneficiary to redirect trust distributions to another beneficiary or charity without triggering a taxable gift?
Answer: Disclaimer
A qualified disclaimer under IRC §2518 allows a beneficiary to refuse a trust interest within nine months of the transfer, passing assets to the next beneficiary without gift tax consequences.